Facebook on Collision Course With Google on Web Searches

By

Evelyn M. Rusli and

Amir Efrati

Updated Jan. 16, 2013 3:07 a.m. ET

After years of collecting photos and personal data from its billion-plus members, Facebook Inc.FB-1.26% Tuesday unveiled a search tool that sifts through people's profiles—and pushes the social network deeper into Google Inc.'s home turf.

The two companies are vying to become the primary gateway to the Internet. Google has long served as a destination to find websites and information; Facebook, to share gossip and photos with friends. But those distinctions are increasingly blurring, and billions in advertising dollars are at stake.

The social network said Tuesday it will enable members to conduct complex queries related to their friends' profiles, such as "tourist attractions in France visited by my friends."

In doing so, Facebook is attacking Google's core strength and its most lucrative product—search—in a bid to convince people they might not need to use Google to find information.

Google generates the majority of its $40 billion in annual revenue world-wide from selling ads on its search engine. In the U.S., Google was projected to make more than $13 billion in search-ad revenue, or 75% of the entire market, in 2012, according to research firm eMarketer Inc.

Google's repository of information remains unmatched. It said it has indexed 30 trillion unique Web pages across 230 million sites. Last year, Google changed its search engine to make it easier for people to quickly get detailed information about people, places and real-world things by displaying photos, facts and other "direct answers" to search queries at the top of the search-results page, rather than just links.

ENLARGE

Having witnessed Facebook's rise and anticipating its move into search, Google built its own social-networking service, Google+, in 2011 to obtain data about specific individuals by name, their personal interests and the identities of their friends. It then integrated Google+ with its Web-search service, so that people searching for a particular website, local restaurant or real-world product will be alerted if any of their Google+ contacts previously rated it positively or negatively.

A Google spokesman declined to comment.

But Facebook has a far larger social network and a sizable head-start after spending years encouraging its members to add photos and all sorts of personal information to their profiles, from basic data like location, employer name and interests to more sensitive details such as age, religion and romantic status.

Much of that data is now searchable using Facebook's new "Graph Search" feature after more than a year in development. Facebook began rolling it out Tuesday as a test to a limited number of users. For Web searches that Facebook can't deliver, the queries are served by Bing, the search engine from Facebook partner Microsoft Corp.MSFT-0.38%

Amazon and LinkedIn declined to comment. A spokesman for Yelp, whose shares dropped more than 7% in the wake of Facebook's announcement, wasn't immediately available for comment.

Related

Facebook Unveils Graph Search

Facebook unveiled a Graph Search, a new feature that allows users to search within their networks. Could Graph Search take the place of LinkedIn, Yelp and OkCupid? George Stahl reports on digits. Photo: Facebook, Inc.

Facebook today unveiled a new search tool that will allow users to more accurately search for things inside of the social network. Facebook say graph search will only search things that are publicly available. Photo: Facebook, Inc.

Facebook unveiled a new service that lets its large audience of users search for specific data both inside and outside of their networks on the social site. Scott Kessler of S&P Capital IQ discusses the tool's implication on The News Hub. Photo: AP.

Mike Isaac reports from Facebook HQ on the new Graph Search that allows users to find relevant search results without leaving the Facebook site.

WSJ's Tom Gara and Matthew Lynley compare Facebook's new Graph Search to other Internet search engines like Google and Microsoft's Bing and discuss why the social network's search tool may beat the competition. (Photo: Facebook)

"I don't think one query will take down a whole business today, but (many of) these businesses have to be worried because they are social in nature," said Brian Blau, a Gartner analyst.

Facebook didn't announce any business initiatives connected with the new capability, which won't initially be available on mobile devices—where a growing number of users are tapping into the service.

But the product will likely open moneymaking opportunities down the road for Facebook in the form of search advertising, as the company works to boost its revenue following its botched initial public offering last May.

Facebook currently makes most of its revenue by selling small graphical, or display, ads on its site.

Facebook Chief Executive Mark Zuckerberg acknowledged that Graph Search could help Facebook make more money, but demurred on when the company might capitalize on those opportunities.

"This could potentially be a business over time, but for now we've really focused on building out this user experience," Mr. Zuckerberg said at the product's launch event at Facebook's Menlo Park, Calif., headquarters, adding that the company has no specific targets for making the search service more widely available.

Investors didn't appear to be surprised by the news, which followed days of speculation online that Facebook would announce a search tool. Facebook's shares, which have risen more than 75% since their September nadir, fell 2.7% to close Tuesday at $30.10.

More on Google

Facebook has introduced a slew of new products in recent months that indicate it is going after new revenue. The product debuts include stand-alone mobile texting applications; Facebook Exchange, a real-time bidding ad exchange that allows advertisers to better target specific groups; and Gifts, an online store. The company reports fourth-quarter earnings on Jan. 30.

Facebook has long had a basic search tool, but it was geared toward rudimentary searches such as someone's name or a company's Facebook page. With Graph Search, Facebook has taken its data and spliced it, indexing it into numerous categories that make it easier for people to discover results when they search using natural language terms.

For instance, if someone wants to find photographs of their friends tagged at Yellowstone National Park, he or she can type in "photos of friends at Yellowstone." If they want to broaden that search, they can alter a search query to "photos of friends at national parks." Like Google, results begin to show up as a user types in their query.

At the event, Facebook also tried to blunt potential concerns about what the search feature means for privacy. The social network, which has been criticized in the past by consumer advocates for its handling of user data, said it would only allow users to see information that is already accessible to them.

In addition, before the search product is released to the entire social network, users will see a notification on the top of their home page, urging them to review what personal data is exposed to Graph Search.

"Privacy, as part of this product, is so deeply built in," Mr. Zuckerberg said.

The Graph Search project began in earnest in mid-2011, when Lars Rasmussen, Facebook's director of engineering for search, showed Mr. Zuckerberg a demonstration of a basic prototype.

During the meeting, held in Mr. Zuckerberg's conference room, Mr. Rasmussen said the search team could build an engine that could show instant results, drawing from across the social network. Mr. Zuckerberg liked the idea, but was skeptical.

"He said you'll never make that work, but if you can it will be awesome," said Mr. Rasmussen, who led the project with Tom Stocky, Facebook's director of product management for search.

Facebook's search team, which numbers more than 50 people, pushed hard in the final months on the project, with the team on "lockdown"—essentially a crunch period—for 34 days during the winter, Mr. Stocky said. During that time, Mr. Zuckerberg made frequent night visits to the group.

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